Indonesia's economy, the 16th largest in the world, has grown at a rate of 6% in recent years. Yet, its conventional domestic energy production is no longer sufficient to support its economic growth. More than one third of Indonesia's population currently lacks access to electricity, and for those that do, brownouts are commonplace.

Chevron is one of the world's leading integrated energy companies. The company is the world leader in geothermal energy production used for electricity and has developed 25% of the world's capacity in this area.

Geothermal energy is a reliable source of power that can reduce the need for imported fuels for power generation. It's also renewable because it is based on a practically limitless resource — natural heat within the earth.

Only a small group of places around the globe provide the conditions needed to generate geothermal energy. At these locations, deep fractures in the earth's crust allow the molten rock to surge close enough to the earth's surface to heat water underground. One of those locations is Indonesia.

Chevron has been investing in Indonesia's geothermal sector since the 1980s and now manages several geothermal projects in the country.

Darajat III and the Clean Development Mechanism

In partnership with the state oil company Pertamina, Chevron commissioned the Darajat Unit III geothermal power station in 2007. The station generates over 110MW of electricity sold under a power purchase agreement to the state-owned grid operator PLN. It provides a major contribution to supporting the provision of clean, reliable and affordable electricity in Indonesia.

The power is highly reliable and can supply more than 825,000 households. Today Darajat Unit III provides approximately 0.6% of Indonesia's electricity.

Further, the clean energy produced by the Darajat Unit III facility offsets millions of tonnes of carbon emissions, and has thus been registered as a Clean Development Mechanism project under the UNFCCC's Kyoto Protocol, generating Certified Emission Reductions.

Scaling up

Geothermal power has significant expansion opportunities in Indonesia, as a modest fraction of the available capacity is currently tapped. The demand for power generation in Indonesia is robust, as Indonesia's economy continues to grow at a healthy pace.

Several million people still lack access to energy, and many others experience electricity shortages. Indonesia would also like to reduce its dependence on foreign oil. Using geothermal energy could displace the consumption of fossil fuels, which could then be exported.

There are other areas in the world where conventional geothermal energy may be economically viable. The geography and volcanism of potential sites are factors in determining whether geothermal power is feasible.

Chevron continues to pursue additional geothermal prospects globally. Carbon credits remain an important factor in future investment decisions in countries where they are supported by regulatory frameworks, and the value associated with these greenhouse gas emission reduction credits has the potential to make geothermal energy more affordable to consumers.